Australia must do more to build 'true innovation eco-system'


Teva Pharma is the world's largest generics company but there is much more to Teva in Australia, according to managing director John Michailidis.

Mr Michailidis was appointed to lead the Israel-based company's Australian and New Zealand commercial operation in August 2014. He was its first employee, but now leads a commercial organisation of over 45. In addition, approximately 40 scientists run the only global pharma biologic drug discovery unit in Australia.

"I started with a laptop and a phone, and set about building an organisation and negotiating the repatriation of our products already on the market in Australia."

Teva officially commenced commercial operations in March last year, having taken back rights to several products previously distributed in Australia through partnerships, including PBS-listed multiple sclerosis therapy COPAXONE and biosimilar chemotherapy induced-neutropenia therapy TEVAGRASTIM.

It has grown quickly and will shortly move into new custom-built offices on a different floor in the same building it currently occupies in Sydney's Macquarie Park.

What makes Teva unusual for an Australian-based subsidiary of one of the world's largest pharmaceutical companies is the co-location of its commercial and drug discovery teams, Mr Michailidis tells BiotechDispatch.

The fact it engages in basic drug discovery research makes it unusual amongst its peers and is something that has attracted the interest of many Australian politicians.

Teva Pharma and Mr Michailidis have been engaging with political and policy leaders to advance the unique translational capability Teva has in Australia by being able to demonstrate the entire innovation pathway from drug discovery and design through to commercialisation.

The company has hosted a number of senior politicians at its offices and Mr Michailidis recently joined NSW Premier Mike Baird's business delegation to Israel organised by the Australia Israel Chamber of Commerce.

"Teva’s focus in Australia is innovation, which comes not only from our drug discovery work done locally but also our global pipeline and by leveraging our generic heritage. Teva has the largest medicine cabinet in the world and is uniquely positioned to respond to market need for incremental but important innovation to existing products.”

As the company responsible for one of the first biosimilars listed on the PBS, hospital-based TEVAGRASTIM, Mr Michailidis highlights the need for clear direction around biologic medicines which are scientifically complex and not simple generics. "The prescriber should maintain control of the dispensing decision," he tells BiotechDispatch.

Mr Michailidis says, like many global pharmaceutical companies, Teva is diversifying and building on its success in generics.

Teva has an entire R&D team solely focussed on innovating existing products - speaking with clinicians and patients and getting their feedback on how to make a product even better," he says, adding that the response from hospitals and Canberra-based policy makers has been very positive.

"If you look at Teva globally, even in big markets like the US, where generics are an important driver, innovation is the key to future growth."

Mr Michailidis is very focussed on innovation, as managing director of Teva but also as someone with a background and keen interest in promoting policy that supports Australian innovation.

He started his career as a scientist before around two decades in leadership roles across the global pharmaceutical and local biotechnology sector.

His interest is across all levels of innovation, citing the company's dual focus on drug discovery and the development of new therapeutic entities.

"In the end, we have to demonstrate value to justify good pricing, but the response to date has been very positive."

It is when the subject turns to innovation that Mr Michailidis reveals his passion for the subject, reflecting his background as a scientist and experienced leader of Australian-based biotechnology companies.

"Australia must do more to build a 'true innovation eco-system'," he says. "The current approach is often piecemeal and disconnected. Incentives are often disjointed when you look across universities, institutions, start-ups and researchers and the lack of adequate venture capital often forces start-ups to list to early. They then spend so much of their time travelling to raise more funding."

"There is very little incentive for academics to take their discoveries through the translation process because they are not well rewarded for it - they get government grants based on publications, not patents, and they rarely receive any significant financial reward from translation.

"We have to change and align incentives so the focus is product creation and commercialisation. Translation needs to be addressed holistically," he says. 

"All Australian governments provide direct financial support for R&D but, as long as incentives for all stakeholders are not aligned, this financial support will not translate into products or generate a clear return.

"Government is a key stakeholder in creating the eco-system - all the different parts operating together and in unison - but it can't translate the 'R' into 'D'."

Mr Michailidis urges Australia to study the Israel model, Teva’s home, which has focussed significant policy attention on encouraging the creation and growth of a 'start-up' culture.

"We should follow the lead of Israel, where there has been a significant and long-term commitment to innovation. A nation of just 8.5 million people attracted around US$5 billion in start-up venture capital funding last year. In contrast, Australia, with 24 million people, attracted about $US250 million - 20 times less.

"It is a combination of things that have changed Israel into the 'start-up nation'. Government set the policy but the universities have also changed their approach, emphasising the importance of researching with a product in mind. This is particularly important for life sciences where the lead times are so long.

"Innovation has to be seen holistically and Teva is uniquely placed in Australia to demonstrate the entire translation pathway from drug discovery to commercialisation. I always tell politicians that we want other global pharmaceutical companies to make similar commitments. We would all benefit from that - as an industry and a country."